Taqueria El Primo LLC v. Ill. Farmers Ins. Co.

• Decision Date: 28 December 2021
• Docket Number: Civil No. 19-3071 (JRT/BRT)
• Citation: 577 F.Supp.3d 970
• Parties: TAQUERIA EL PRIMO LLC, Victor Manuel Delgado Jimenez, Mitchelle Chavez Solis, Benjamin Tarnowski, El Chinelo Produce, Inc., and Virginia Sanchez-Gomez, individually and on behalf of all others similarly situated, Plaintiffs, v. ILLINOIS FARMERS INSURANCE COMPANY, Farmers Insurance Exchange, Farmers Group, Inc., Truck Insurance Exchange, Farmers Insurance Company, Inc., and Mid-Century Insurance Company, Defendants.
• Court: U.S. District Court — District of Minnesota

577 F.Supp.3d 970

TAQUERIA EL PRIMO LLC, Victor Manuel Delgado Jimenez, Mitchelle Chavez Solis, Benjamin Tarnowski, El Chinelo Produce, Inc., and Virginia Sanchez-Gomez, individually and on behalf of all others similarly situated, Plaintiffs,

v.ILLINOIS FARMERS INSURANCE COMPANY, Farmers Insurance Exchange, Farmers Group, Inc., Truck Insurance Exchange, Farmers Insurance Company, Inc., and Mid-Century Insurance Company, Defendants.

Civil No. 19-3071 (JRT/BRT)

United States District Court, D. Minnesota.

Signed December 28, 2021

Anne T. Regan and Nathan D. Prosser, HELLMUTH & JOHNSON PLLC, 8050 West Seventy-Eighth Street, Edina, MN 55439; David W. Asp, Derek C. Waller, Jennifer Jacobs, Kristen G. Marttila, and Stephen Matthew Owen, LOCKRIDGE GRINDAL NAUEN PLLP, 100 Washington Avenue South, Suite 2200, Minneapolis, MN 55401; Paul J. Phelps, SAWICKI & PHELPS, 5758 Blackshire Path, Inver Grove Heights, MN 55076, for plaintiffs.

Emily C. Atmore, Marc A. Al, and Margaret E. Dalton, STOEL RIVES LLP, 33 South Sixth Street, Suite 4200, Minneapolis, MN 55402; Timothy W. Snider, STOEL RIVES LLP, 760 Southwest Ninth Avenue, Suite 3000, Portland, OR 97205, for defendants.

MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS’ MOTION TO EXCLUDE EXPERT TESTIMONY AND GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION

JOHN R. TUNHEIM, Chief Judge

Named plaintiffs Taqueria El Primo LLC, Victor Manuel Delgado Jimenez, Mitchelle Chavez Solis, El Chinelo Produce, Inc., Virginia Sanchez-Gomez, and Benjamin Tarnowski brought a class action against Defendants Farmers Group, Inc., Trucker Insurance Exchange, Farmers Insurance Company, Inc., Farmers Insurance Exchange Company, and Mid-Century Insurance Company (collectively "Farmers"). Plaintiffs allege that Farmers entered into secret agreements with health care providers wherein the providers agreed to not bill Farmers for care provided to Farmers's insureds, thereby limiting the ability of the insureds to seek care from the provider of their choosing. Plaintiffs allege that these billing limitations breached the insurance policy contracts between insureds and Farmers and violate Minnesota's No-Fault Insurance Act. Plaintiffs bring claims under the Minnesota Consumer Fraud Act ("MCFA"), under the Minnesota Uniform Deceptive Trade Practices Act ("MDTPA"), and for breach of contract. Plaintiffs now move for Class Certification and Appointment of Class Representatives and Class Counsel ("Motion for Class Certification").

Plaintiffs move to certify two classes: (1) a Damages Class defined as "[a]ll persons or entities who purchased an insurance policy on or after January 13, 2013 within the State of Minnesota from any of the Defendant Insurers that provided for medical expense benefits under Minnesota's No Fault Act," and (2) an Injunctive Class defined as "[a]ll persons or entities who purchased an insurance policy on or after January 13, 2013 within the State of Minnesota from any of the Defendant Insurers that provided for medical expense benefits under Minnesota's No Fault Act, and who maintain that policy." Accordingly, Plaintiffs request both an award of monetary damages and an injunction enjoining Farmers from enforcing the billing limitations. Plaintiffs also seek to appoint class representatives and class counsel. Farmers opposes class certification. It also opposes appointing the proposed class representatives and appointing some of the proposed class counsel.

The Court will grant the Motion for Class Certification for the Injunctive Class. The Court will grant the Motion for Class Certification for the Damages Class on the MCFA claim. The Court will deny the Motion for Class Certification for the Damages Class on the MDTPA and breach of contract claims. The Court will also appoint the proposed class representatives and class counsel.

In addition to opposing the Motion for Class Certification, Farmers filed a Motion to Exclude Expert Testimony in Support of the Motion for Class Certification. In support of their Motion for Class Certification, Plaintiffs submitted expert opinion testimony from Allan I. Schwartz and Michael J. Rothman. Farmers moves to exclude all of Schwartz's testimony arguing he has failed to show that his methodology is the product of reliable principles and methods and is speculative and unreliable. Farmers moves to exclude various portions of Rothman's testimony as (1) inadmissible legal opinions, (2) opinions offered without foundation, (3) opinions that Rothman is not qualified to render, or (4) a combination of these. Under the focused Daubert analysis appropriate at class certification, the Court will deny the Motion to Exclude Schwartz's and Rothman's testimony.

BACKGROUND

I. FACTUAL BACKGROUND

A. Defendants’ Relationship and Farmers's Policies

Defendants are a collection of related companies in the automobile insurance business.¹ Farmers Insurance Exchange, Truck Insurance Exchange, Illinois Farmers Insurance Company, Farmers Insurance Company, Inc., and Mid-Century Insurance Company sell insurance policies under the common name "Farmers Insurance Group of Companies." (2^nd Am. Compl. ¶¶ 31–32, June 5, 2020, Docket No. 65.) This includes selling automobile insurance policies in Minnesota governed by Minnesota's No-Fault Insurance Act. (Id. ; Defs.’ Joint Answer to 2^nd Am. Compl. ¶¶ 31–32, June 19, 2020, Docket No. 70.) The defendants share various services including the investigation of insurance fraud. (2^nd Am. Compl. ¶ 30; Defs.’ Joint Answer to 2^nd Am. Compl. ¶ 30.) Farmers Group, Inc. provides various common services to the other Defendants including legal and underwriting services, billing, advertising, drafting policy language and forms, internal investigations and discipline, and regulatory filings. (1^st Decl. of David W. Asp ("1^st Asp Decl."), Ex. 2 at 64:17–69:7, 112:18–118:19, 119:18–123:19, 135:8–137:25, 142:23–145:20, Mar. 30, 2021, Docket No. 129-1.)

Farmers sells insurance policies in Minnesota. These policies purport (1) to conform to Minnesota's No-Fault Automobile Insurance Act ("No-Fault Act") and (2) to pay "all reasonable expenses incurred for necessary [m]edical, surgical, x-ray, optical, dental, chiropractic and rehabilitative services." (Defs.’ Joint Answer to 2^nd Am. Compl. ¶ 3; 2^nd Am. Compl. ¶ 69; see also Am. Compl., Ex. A at 3, Dec. 13, 2019, Docket No. 8-1.)² The No-Fault Act guarantees that insureds who have policies governed by the Act are "entitled to the full medical expense benefits set forth in [the Act], and may not receive medical expense benefits that are in any way less than those provided for in [the Act], or that involve any preestablished limitations on the benefits. Medical expenses must be reasonable and must be for necessary medical care ...." Minn. Stat. § 65B.44, subd. 1(b). The Act further requires insurance companies to "reimburse all reasonable expenses for necessary ... medical, surgical, x-ray, optical, dental, chiropractic, and rehabilitative services, including prosthetic devices." Minn. Stat. § 65B.44, subd. 2(a). The law explicitly provides one limitation on reimbursement: persons convicted of insurance fraud "may not enforce a contract for payment of services eligible for reimbursement under [the Act] against an insured or an [insurer]." Minn. Stat. § 65B.44, subd. 2a(a) ; see also Minn. Stat. § 65B.43, subd. 9.

Collectively, Farmers has issued hundreds of thousands of affected policies worth more than $1 billion in total premiums paid over the relevant time period. (1^st Asp Decl., Ex. 20 at 5, Mar. 30, 2021, Docket No. 129-18.)

B. Billing Limitations

Farmers entered into confidential contracts with certain health care providers under which the providers agreed not to bill Farmers for any treatment provided to someone insured by Farmers. (2^nd Am. Compl. ¶¶ 2, 29; Defs.’ Joint Answer to 2^nd Am. Compl. ¶ 2; see also, e.g. , Decl. of John P. Darnell ("Darnell Decl."), Ex. 43 ¶ 2, May 28, 2021, Docket No. 159.) Farmers alleges that these contracts are confidential settlement agreements that ended investigations and litigation initiated by Farmers because the providers were engaged in insurance fraud and fraudulent billing. (Defs.’ Joint Answer to 2^nd Am. Compl. ¶ 2.)

Farmers did not disclose the existence of these contracts or the billing limitations to third parties including purchasers of affected insurance products.³ (Id. ; 2^nd Am. Compl. ¶ 2.) Although the full settlement agreements were required to remain confidential, some agreements allowed Farmers to disclose the existence of the billing limitations. (E.g. , Darnell Decl., Ex. 1 ¶¶ 3, 6, Ex. 43 ¶ 2.3.) Others, however, only allowed disclosure of the billing limitation in the context of an actual claim. (E.g. , Darnell Decl., Ex. 48 at 13.) Purchasers of insurance products from Farmers were thus unaware that there were certain providers that were not permitted to bill Farmers if a Farmers policyholder sought care from the provider. (See 2^nd Am. Compl. ¶ 68.)

The number of providers subject to these agreements varied with time. For example, a lawsuit against 95 providers resulted in 28 settlement agreements with billing limitations that expired after varying amounts of time. (Darnell Decl. ¶¶ 25–30.) Some billing limitations are perpetual and will never end absent an agreement between Farmers and provider. (See id. ¶¶ 29–30.)

II. CLASS CLAIMS AND CERTIFICATION

A. Class Claims

Plaintiffs on behalf of themselves and all others similarly situated, filed this lawsuit against Farmers. In their Second Amended Complaint, Plaintiffs bring class action claims against Farmers for violations of the MCFA and the MDTPA as well as for breach of contract under Minnesota law. (2^nd Am. Compl. ¶¶ 82–119.) They seek a declaratory judgment that any contractual provision limiting coverage guaranteed either by the insurance policies or the No-Fault Act is void, an injunction prohibiting Farmers from enforcing any limitations that violate the policy terms or...